IFC, Amundi to form $2 billion green bond fund on emerging markets

By Susanna Moon

Chicago, April 21 – IFC, a member of the World Bank Group, and Amundi, a European asset manager, will create a $2 billion fund that aims to be fully invested in green bonds within seven years.

The initiative “aims to deepen local capital markets and expand financing for climate investments,” according to a company announcement.

IFC said it will invest up to $325 million in the new Green Cornerstone Bond Fund, which will buy green bonds issued by banks in Africa, Asia, the Middle East, Latin America, Eastern Europe and Central Asia.

Amundi will raise the rest of the $2 billion from institutional investors worldwide and will provide its services in managing emerging-market debt.

At first, the fund will target countries and banks that possess a “high potential to issue green bonds before spreading into other markets.”

IFC will also provide first-loss coverage, which will help reduce risk and also rally financing from the private sector, the release added.

The fund will add significantly to the World Bank Group climate targets and IFC's goal of increasing its climate investments to 28% of investments from its own account while using another $13 billion per year in private financing by 2020.

The global market for green bonds has reached more than $100 billion in 2016, having expanded briskly in recent years, but “huge gap persists,” the release added.

Few banks in developing countries have issued the bonds, according to the release, and the new fund is expected to support growth by adding demand and building local markets.

© 2015 Prospect News.
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